[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Notices]
[Pages 80442-80443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32888]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66004; File No. SR-Phlx-2011-155]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Fees for Certain Stock Execution Clerks and the Trading Floor Personnel
Registration Fee
December 19, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 6, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to eliminate the Fees for Certain Stock
Execution Clerks from Section VI of the Fee Schedule.
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on January 3, 2012.\3\
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\3\ The Commission notes that the Exhibit 1 to the proposed rule
change stated that December 1, 2011 is the operative date of the
proposed rule change. The Exchange represents that the operative
date of the proposed rule change is instead January 3, 2012. See
email from Angela S. Dunn, Assistant General Counsel, Exchange, to
Nicholas Shwayri, Attorney-Advisor, Division of Trading and Markets,
Commission, dated December 16, 2011.
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, on the Commission's Web site at
http://www.sec.gov/, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to eliminate the Fees
for Certain Stock Execution Clerks from the Fee Schedule and amend the
Trading Floor Registration Fee to clarify that the fee applies to
Clerks and Inactive Nominees.
Stock Execution Clerks
A stock execution clerk is currently defined in Exchange Rule 1090
as any clerk other than a specialist clerk on the Exchange trading
floor who functions as an intermediary in a transaction (i) consummated
on the Exchange; (ii) entered verbally for execution other than on the
Exchange; or (iii) entered into a third party system designed to
execute transactions other than on the Exchange.\4\ All stock execution
clerks must register as such with the Exchange.\5\
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\4\ See Exchange Rule 1090, Commentary .01(a). Further, No Stock
Execution Clerk shall: (i) act as an intermediary in any transaction
other than under the direct supervision of a member; (ii) enter into
any clearing transaction or participate in any clearing process;
(iii) have discretion or independent authority over any account or
transaction. See Exchange Rule 1090, Commentary .01(d).
\5\ Any member or member organization engaged as a stock
execution clerk shall register as such with the Exchange's
Membership Department. A stock execution clerk that performs any
function other than a solely clerical or ministerial function shall,
prior to performing any function as a stock execution clerk, (i)
comply with the registration requirement(s) set forth in Exchange
Rule 604, where applicable; (ii) disclose in detail to the Exchange,
on an annual basis, the specific nature of such additional
function(s); and (iii) in accordance with Exchange Rule 748, submit
to the Exchange written supervisory procedures relating to such
member or member organization's activities as a stock execution
clerk. See Exchange Rule 1090, Commentary .01(b).
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Generally, ``stock execution'' refers to the service used by
options traders to hedge their options trades with the underlying
stock. Although stock execution is often done electronically, stock
execution clerks provide a service to Exchange members on the options
floor by accepting orders for the purchase and sale of securities
underlying options transactions. Once such orders are accepted, the
stock execution clerk forwards such orders to the appropriate
marketplace for execution. The transactions executed are typically
hedging transactions in underlying stocks for Exchange specialists and
Registered Options Traders.\6\ The transaction may be contingent on an
options transaction \7\ or may stand independently (``stand-alone
equity orders'').
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\6\ A Registered Options Trader (``ROT'') includes a SQT, a RSQT
and a Non-SQT, which by definition is neither a SQT or a RSQT. A
Registered Option Trader is defined in Exchange Rule 1014(b) as a
regular member or a foreign currency options participant of the
Exchange located on the trading floor who has received permission
from the Exchange to trade in options for his own account. See
Exchange Rule 1014(b)(i) and (ii).
\7\ A contingency order is a limit or market order to buy or
sell that is contingent upon a condition being satisfied while the
order is at the post. For certain options contingency orders, the
contingency involves buying or selling the underlying security
(generally called ``stock'' in this proposal). See Exchange Rule
1066(c).
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The Exchange established this fee in 2007 to assess fees
commensurate with the activities of stock execution clerks that handle
stand-alone equity orders (i.e. orders that are not contingent on an
options transaction) .\8\ For those stock execution clerks that handle
orders that are contingent on an options transaction, i.e. orders that
are packaged with an options trade, the Exchange filed to assess
charges associated with those contingency orders, such as option
transaction charges. The Exchange, however, does not assess fees in
connection with stand-alone equity orders, which may be handled by a
variety of intermediaries and which may be executed on different equity
markets. The Exchange established this fee because these clerks
generally are not subject to fees for doing business from the
Exchange's options floor.
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\8\ See Securities Exchange Act Release No. 56221 (August 8,
2007), 72 FR 45855 (August 15, 2007) (SR-Phlx-2007-48).
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The Exchange is proposing to eliminate this fee because there are
no clerks registered as stock execution clerks today.\9\
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\9\ In the instance that a clerk registers as a stock execution
clerk in the future, that clerk would be billed the newly named
``Clerk Fee.'' If the Exchange determined to assess Fees for Certain
Stock Execution Clerks it would file with the Commission to
reinstitute the fee.
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[[Page 80443]]
Trading Floor Personnel Registration Fee
The Exchange currently assesses a Trading Floor Personnel
Registration Fee of $100 per month on individuals who are employed by
such member organizations and who work on the Exchange's trading floor,
such as clerks (for purposes of this fee a clerk includes an Inactive
Nominee), interns and stock execution clerks that handle equity orders
that are part of an options contingency order and other associated
persons. This fee is not imposed on permit holders.
The Exchange proposes to continue assessing the fee as it is being
assessed today, except the Exchange proposes to rename the fee as a
``Clerk Fee'' and also clarify that the fee is imposed on any
registered on-floor person employed by or associated with a member or
member organization pursuant to Rule 1090, including an Inactive
Nominee pursuant to Rule 1090. All non-members and Clerks are required
to register pursuant to Rule 620, entitled ``Trading Floor
Registration.'' \10\ Both Inactive Nominees and interns are clerks
pursuant to Rule 1090. This fee will not be imposed on permit holders,
as is the case today. The Exchange is proposing this text change to
better describe the categories of non-members that are subject to the
fee.
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\10\ All trading floor personnel, including clerks, interns,
stock execution clerks and any other associated persons, of a member
organization not required to register pursuant to Rule 620(a) must:
(i) Register as such with the Exchange by completing the appropriate
form(s) for non-registered persons (with periodic updates submitted
by the member organization, as determined by the Exchange); and (ii)
submit hard copy fingerprint cards or results of processed cards to
FINRA for processing. Further, the Exchange may require successful
completion of an examination, in addition to requirements imposed by
other Exchange Rules. The Exchange may also require periodic
examinations due to changes in trading rules, products or automated
systems. See Exchange Rule 620.
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While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on January 3, 2012.\11\
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\11\ The Commission notes that the Exhibit 1 to the proposed
rule change stated that January 3, 2011 is the operative date of the
proposed rule change. The Exchange represents that the operative
date of the proposed rule change is instead January 3, 2012. See
supra note 3.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to eliminate the Fees for Certain Stock
Execution Clerks because there are no clerks today registered in this
capacity. The Exchange also believes that it is reasonable, equitable
and not unfairly discriminatory to rename the ``Trading Floor Personnel
Registration Fee'' as the ``Clerk Fee'' and amend the text of the Fee
Schedule to better explain the categories of persons subject to this
fee.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\14\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-Phlx-2011-155 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File No. SR-Phlx-2011-155. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-Phlx-2011-155 and should be
submitted on or before January 13, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32888 Filed 12-22-11; 8:45 am]
BILLING CODE 8011-01-P